The CBI warned that the employers' liability (EL) crisis is threatening the lives of many companies.

CBI director general Digby Jones said that difficulties in obtaining EL cover could mean the "end of the lives of many companies".

Jones was anxious to convey the "very serious" nature of the problems facing CBI members. "Many of my members are experiencing difficulty in affording insurance cover or even getting cover at all," he said.

"For many it's a simple choice, operate illegally or close down".

Jones called on the business community to endeavour to reduce the number of EL claims being made. But he warned that this would require a "fundamental culture change".

Jones added that the EL crisis had come about partly as a result of the "development over the last few years of a breed of ambulance-chasing lawyers, which meant employees are making claims far more frequently".

Responding, AXA chief executive Peter Hubbard said that the insurance industry should "educate customers about risk management".